Scenarios range from a new armed uprising against Israel, to a dissolution of the PA, to a renewed drive for a unity government with Hamas – all of which would ratchet up uncertainty in the Middle East and complicate efforts to resume talks.

Though the Palestinian leadership still hopes the US can broker a renewal of talks, "It's a legitimate question to ask: 'What if this doesn't work,' " says Ghassan Khatib, a spokesman for the Palestinian government in the West Bank. "If this fails, why don't we look into direct support by the international community to establish this state?"

A political appeal to the United Nations on statehood has the potential to deepen Israel's growing isolation, especially if the Obama administration wanted to reprimand Jerusalem for not agreeing to an extension of its moratorium on settlement building in the West Bank.

The Palestinians would have to choose whether to seek a mainly declarative resolution on future statehood or a more far-reaching legal decision unilaterally imposing a final-status solution on Israel and the Palestinians.

In a strategy paper from December 2009, a team led by Palestinian Negotiator Saeb Erekat wrote that Palestinians could also seek Security Council endorsement for the parameters of an eventual deal – such as identifying the 1967 border as a basis for a territorial compromise. The paper called this "a more likely option'' than an imposed solution.

UN endorsement of the Arab League peace initiative offering a full normalization with Israel in return for a full withdrawal from occupied lands is yet another option.

Serious intent, or a tactic?

Last week in Egypt, Palestinian negotiator Ahmed Qurei declared that "all the options are open to us," including "armed resistance" and reconciling a three-year rift with the Hamas government in Gaza, the Jerusalem Post reported. He also mentioned the possibility of UN recognition of a unilateral Palestinian declaration of statehood.

Many Palestinians have also discussed the possibility of promoting one Arab-Jewish state, an entity in which Palestinians would enjoy a majority eventually. But some proponents concede it is merely a tactic to create urgency for a two-state solution.

"By supporting such an outcome it will be a jolt to Israelis to wake up and realize that it's high time to create a Palestinian state," says Hanna Sinora, the co-president of the Israel Palestinian Center for Research and Information.

On Wednesday, the International Criminal Court at the Hague was expected to consider Palestinian appeals to file petitions. Because such a right is reserved for sovereign countries, an ICC decision in favor of the measure could be seen as an initial victory for Palestinian recognition by a major international body.

Israel is taking Palestinian idea seriously

Speculation about a push at the UN has not been lost on the Israeli government.

"Since the Palestinians talk about so much, we take it seriously," says an Israeli official who requested anonymity.

Israel is less concerned about the possibility of a UN legal ruling on statehood, since it would require a unilateral demarcation of a border with Israel and a resolution of the competing claims between rival Palestinian governments in Gaza and the West Bank. Thus, in Israel's view, it is less likely to win approval from the UN Security Council. What's more, Israel hasn't noticed any Palestinian diplomatic preparation for a push, according to the official.

And yet, a political declaration by the UN "will have no legal meaning but it will be a powerful statement,'' the Israeli official says, adding that it would not do "a lot of good.... It won't change realities on the ground, but politically it will be an unpleasant moment.''

Diplomatic time-out

The Palestinians have suspended the negotiations started in September in Washington, saying Israel's refusal to extend a 10-month moratorium on settlement expansion in the West Bank demonstrates it is not serious about talks..

Last week, the Arab League endorsed the Palestinian move but gave the Obama administration additional time to resuscitate the talks.

A diplomatic time-out in the final few weeks before US mid-term elections, however, has kicked up speculation about a breakdown in talks and a drive at the UN against Israel.

"Israel's diplomacy has reached a turning point,'' wrote political columnist Aluf Ben in the liberal Haaretz newspaper. "Instead of dealing with the failed direct talks, from this point Israel will be orchestrating a diplomatic holding action against the Palestinian initiative to have the UN Security Council recognize Palestinian independence within the 1967 borders.''

UN recognition would be 'unbelievable blow'

To be sure, some observers caution that the "day after'' a breakdown may be months away, and that UN acceptance of Palestinian statehood is far from assured. The US, a strong ally of Israel, is one of five veto-wielding members on the UN Security Council.

"I don't think that members of the permanent five [Security Council members] would allow it to pass because they don't think its the best way to bring about Palestinian statehood,'' says a Western diplomat who requested to remain anonymous. "Most sensible people believe that a negotiating process is the best way. It would produce the least troublesome and the least traumatic solution in terms of violence. And the negotiating process is far from exhausted.''

A Palestinian drive for international recognition for statehood would likely signal the failure of the latest US mediation effort.

"It will be proof that the efforts collapsed. At this moment, although there is no movement, everybody thinks it is alive, and any day it can pop up with a breakthrough,'' says Alon Liel, a former Israeli foreign ministry director general. "If they succeed in embarrassing Israel, especially if the US is indifferent or abstaining, it will be an unbelievable blow.''